2021 Alberta Technology Deal Flow Study - April 2021
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2021 Alberta Technology Deal Flow Study April 2021
CEO's Message The Alberta tech and venture capital industry has demonstrated encouraging signs of growth and maturation over the last two years, with record-breaking venture capital investment, and a significant increase in the number of technology companies operating in the province with more than 3,000 companies identified in this study. These critical milestones signal Alberta’s future is bright. Investors are noticing the exciting opportunity to invest in Alberta’s founders and the innovative companies they are building. Alberta Enterprise Corporation (AEC) is helping to build a thriving and sustainable technology industry in Alberta, one that encourages diversity and inclusion, and that aims to change the way Alberta is perceived on the global stage. We encourage home-grown innovation and create greater access to venture capital for technology entrepreneurs. While deal flow is a key indicator of a thriving technology ecosystem, it is often difficult to track and there is limited data available. To bridge this knowledge gap, and to provide deeper insight into the deal flow landscape in Alberta, AEC commissioned this study to build upon the 2012, 2016 and 2018 reports. The study offers invaluable insights on the participants, types of companies, funding, founder makeup and more. The Alberta technology industry is showing exciting signs of maturity with almost 40% of Alberta tech companies exceeding annual revenues of $1M, a 66% increase since 2018! Alberta tech startups are also more likely than ever to receive funding with over 57% having undergone one or more rounds of fundraising and 43% having raised at least $US1 million to date. The makeup of Alberta deal flow could be surprising to some, as 67% of Alberta companies are developing a software solution. Companies are also integrating digital technologies like Artificial Intelligence and Machine Learning (36%) and big data (27%) into their products and services. These are encouraging figures, reflecting Alberta’s notable strength in Artificial Intelligence and Machine Learning, including Reinforcement Learning. Female participation in Alberta’s technology companies is staying strong with the proportion of female tech founders remaining at almost 30%, a trend consistent with the 2018 study. Alberta's female participation at the founder and co-founder level leads globally when compared to Crunchbase’s 2020 report which found that 20% of global startups were female founded.1 Thank you to all the contributors, partners and organizations who not only made this study possible but work tirelessly day in and day out to improve the startup and venture capital ecosystem in Alberta. We hope the findings are valuable in your endeavours and help your organizations continue to support, fund and scale promising Alberta technology companies. Kristina Williams President & CEO, Alberta Enterprise Corporation 1 Crunchbase EoY 2019: Funding to Female Founders, Crunchbase, https://about.crunchbase.com/wp-content/uploads/2020/03/Funding-To-Female-Founders_Report.pdf, January 21, 2020.
Contents
Executive summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Study Background and Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Approach Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Alberta’s Technology Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Overview of Alberta’s Tech Companies in 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Trends Over Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Regional Breakdown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Industry Breakdown. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Technology Founders and Employees . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Founders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4. Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Company Characteristics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Products and Services Offered. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.4 Exports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.5 Challenges and Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5. The Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2 Funding Stage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3 Fundraising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Appendix A: Glossary of Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Appendix B: Detailed Approach & Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Appendix C: Study Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Appendix D: List of Sources Used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Appendix E: Detailed Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Executive Summary The Alberta Tech Deal Flow Study is the most comprehensive view of technology-based companies in Alberta and is made possible by the contributions from tech companies, venture capital and angel investors, and service providers across the province. In 2021, we saw a significant increase in the number of submissions to the study which provided more context and accuracy than prior studies. We were excited to co-author the study with the same team who produced the PwC MoneyTree Canada Report, leveraging the significant subject matter expertise and additional networks of the PwC Canada team. We augmented the 2021 Deal Flow Study methodology to uncover a more well-rounded view of the innovation ecosystem in Alberta. This enhanced methodology will provide more in-depth findings on the tech companies and their unique attributes across verticals, stages, and other dimensions. A total of 3,083 tech companies were identified as meeting the criteria for the study, this result demonstrates a 149% increase over the 1,238 companies identified in 2018. In comparison to the 927 companies identified in 2012, we can observe a steep increase in the number of startups being created and enduring in our province. Calgary-based companies accounted for 58% (1,776) of tech companies identified compared to Edmonton which accounted for 30% (918) and other regions in Alberta which accounted for almost 13% (389). Business-to-business (B2B) was found to be the most attractive business model to survey respondents (72%), and as software continues to be the leading enabling technology in a company's offering, utilized by 67% of the tech deal flow, we know that Alberta boasts a strong contingent of enterprise software companies. Companies identified their target customer industries being primarily concentrated in professional and other services (34%), followed by other industrials (23%) and energy and mining (15%). The survey results suggest that Alberta’s technology sector is becoming more mature and established, with almost 40% of the startups surveyed in the 2021 Deal Flow Study reporting greater than $1M in annual revenue (a 66% increase over 2018!). Further evidence of this steady growth is that while 43% of Alberta’s technology startups are at the Pre-Seed or Seed stage, almost a quarter of Alberta startups have raised a Series A or later stage of financing. Through integration of the Startup Commons Development Phases into this year’s study, we also found that over half of companies are at the Scaling Stage, while 29% are Validating, demonstrating that companies are moving into later stages of development beyond the Ideating, Concepting and Committing stages. The static snapshot in time which the 2021 Alberta Tech Deal Flow Study provides can be further built upon with real-time data on the StartAlberta.com Deal Flow Platform, operated by the Venture Capital Association of Alberta (VCAA) and the A100, and supported by a consortium of ecosystem partners. The 2021 Alberta Tech Deal Flow Study was made possible due to input from Alberta’s tech and venture capital firms and numerous organizations that make up the Alberta ecosystem. Alberta Enterprise expresses its thanks to Alberta Enterprise portfolio venture capital funds, Western Economic Diversification Canada (WD), and to all those that contributed. We hope the study findings continue to be useful in supporting the growth of Alberta’s technology sector. Christiana Manzocco Director, Industry Development, Alberta Enterprise Corporation 1 | Alberta Technology Deal Flow Study 2021
1 Introduction
1.1 Study Background and Objectives
The North American Industry Classification System (NAICS)
Alberta Enterprise Corporation periodically produces
was used to classify the identified companies’ industry of
an Alberta Deal Flow Study. The objective is to provide
operation.2
stakeholders with a shared understanding on the strength and
make-up of technology deal flow across sectors, stages and
Stage 2 - Criteria and mapping
regions in Alberta. The Deal Flow Study provides a leading
yardstick for measuring the health, growth and composition A list of candidate technology companies was compiled ac-
of the Alberta technology and innovation sector. Previous cording to a number of company attributes, including location
Deal Flow studies were completed in 2012, 2016 and 2018 of headquarters, product offering and industry classification.
and were made possible due to the collective support from
Alberta’s tech firms and numerous organizations that make up Stage 3 - Company screening and verification
the Alberta ecosystem. Companies relevant to the 2021 Study were verified according
Insights gleaned from the Alberta Deal Flow Studies also to a number of attributes:
inform Alberta Enterprise’s investment focus and industry • Headquartered in Alberta
development priorities and activities, as well as serve as a
• Privately held
valuable benchmark for comparison to previous Deal Flow
Studies in measuring the progress and maturity of the Alberta • Produced a tech based product or service
tech industry. • Industry classification that does not include retailers,
wholesalers, resellers and distributors.
This year, PricewaterhouseCoopers LLP (“PwC”) was
commissioned by Alberta Enterprise Corporation to conduct
Stage 4 - Detailed survey of sample companies
this study of the technology industry in Alberta for 2021 (the
The last stage of the study was an in-depth survey of
“2021 Study”).
Alberta’s tech sector. To this end, an online questionnaire was
distributed to companies that meet the verification criteria.
1.2 Approach Overview
Unless otherwise noted, all dollar amounts in this report are
The 2021 Study was conducted by PwC in four major stages. expressed in Canadian currency. Percentages presented in
The updated 2021 Deal Flow Study Methodology is explained this report are rounded for simplicity.
in further detail in Appendix B Detailed Approach. Overall, 3,083 technology companies were found to be
Stage 1 - Scoping and criteria development operating in Alberta in 2021 (referred throughout the report
as “Identified Companies”), compared to 1,238 identified
For the purpose of this study, technology industry was defined
companies in 2018. The survey was completed by 350 in
to include software, hardware, equipment, devices, chemicals,
2021, compared to 208 companies in 2018. Companies'
health or life science product or service, and any product or
whose details were captured in the detailed survey work are
service offerings that require development and / or research
referred to in this report as "Survey Respondents".
(but excluding value added resellers, integrators, distributors
and resellers of high technology products manufactured by
others).
Headquarters Location Identified Companies Companies Completing Online Survey
Calgary 1,776 217
Edmonton 918 123
Other Alberta 389 10
Total 3,083 350
2 See https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=1181553 for details about NAICS
3 | Alberta Technology Deal Flow Study 20212 Alberta’s
Technology
SectorThis section provides an overview of Alberta's technology sector, including an industry and regional breakdown of the identified
companies.
2.1 Overview of Alberta’s Tech 2.2 Trends Over Time
Companies in 2021
The 2021 Study identified 1,845 more technology
Based on the criteria used in this study, 3,083 technology companies than in the 2018 Alberta Deal Flow study. The
companies were found to be operating in Alberta in 2021 figure below compares the number of Identified Companies
(“Identified Companies”). The following sections present in the 2021 Study with the 2018 Alberta Deal Flow Study,
summary statistics related to the Identified Companies. including the industry breakdown.
Note the industry classifications used in 2018 do not correspond to those used in the 2021 Study - we have assigned the 2021 classifications using best possible
approximation.
It should be noted that the regional and industry distribution of
the technology companies in the 2021 Study is similar to the
distribution in previous studies.
Several factors can explain the significant increase in the
number of Identified Companies in the 2021 Study compared
with the 2018 study, including:
• Use of same as well as additional data sources
• Broader industry classification used in 2021, and
• Organic growth of the technology industry in Alberta.
Refer to Appendix C for a more detailed explanation.
5 | Alberta Technology Deal Flow Study 20212.3 Regional Breakdown
Most Identified Companies are headquartered in Calgary Calgary and Edmonton account for a vast majority of
and Edmonton - together, these two cities account for Identified Companies’ headquarters locations regardless
approximately 87% of all Identified Companies in the list. of the industry classification, though some differences
exist. For example, 60% of Energy and Mining companies
Other cities within Alberta with Identified Companies’ are headquartered in Calgary and 24% in Edmonton. In the
headquarters include Red Deer and Lethbridge, each case of the Health, Wellness and Medical Industry, Calgary
accounting for approximately 1% of all identified companies. accounts for 56% of the companies headquarter locations,
Other cities account in total for 10% of all Identified while Edmonton for 30%.
Companies’ headquarters.
Figure 3: Regional Breakdown and Top Industries
Other Alberta:
389 companies
12 .6% Information & Media - 29.6%
Other industrials - 23.1%
Professional and other services - 20.1%
Edmonton Region:
918 companies
29 .8% Information & Media - 29.5%
Other industrials - 22.4%
Professional and other services - 20.4%
Calgary Region:
1,776 companies
57 .6% Information & Media - 28.8%
Other industrials - 22.6%
Professional and other services - 20.3%
Compared to the 2018 Study, the share of companies
headquartered in Calgary and Edmonton has decreased
(62% in Calgary and 32% in Edmonton in 2018), while the
proportion of companies headquartered elsewhere in Alberta
has increased in 2021 (6% in 2018).
6 | Alberta Technology Deal Flow Study 20212.4 Industry Breakdown Most of the Identified Companies operate in the information Each summary industry classification comprises multiple & media industry (29%), followed by industrials (23%), sub-industries. The following figures show the number of professional and other services (20%), health and life companies by detailed industry classification. sciences (14%), energy and mining (11%), and agriculture, food & bio-resources (3%). 7 | Alberta Technology Deal Flow Study 2021
8 | Alberta Technology Deal Flow Study 2021
3 Technology
Founders and
Employees3.1 Overview
Company’s characteristics presented in this and the following
sections are based on the detailed survey results.
Average founder age is 43, while 58% of founders are between
the ages of 31 and 50.
85% of companies have between one and three
founders, and 75% have fewer than 25 employees.
87% of founders have technical backgrounds.
68% of founders have previous experience in
establishing a startup.
27% of surveyed companies have at least one
founder who identifies as a female.
50% of startups have at least one founder who identifies as a
visible minority and 4% identify as Indigenous.
10 | Alberta Technology Deal Flow Study 20213.2 Founders The average founder age at 43 is the same as in the 2018 Study. Over 35% of founders are age 51 and above. The vast majority of Survey Respondents have either one (22%) or two founders (41%). Only one in twenty companies were founded by five or more people. 11 | Alberta Technology Deal Flow Study 2021
Technical backgrounds (87%) and previous startup
experience (68%) are common characteristics of founders.
27% of Survey Respondents have at least one female Additionally, an End of Year Diversity report by Crunchbase
founder, which is materially the same as the 2018 study. found that 20% (7 percentage points below our findings for
We note that this is 11.4 percentage points higher than Alberta) of global startups have at least one female founder.
the share of women majority owners of Small Medium
Enterprises in Canada (15.6%), according to a recent Women • Furthermore, Survey Respondents with at least one
Entrepreneurship Knowledge Hub report.3 female founder are more likely to have been established
over the last 2 years (26% of companies with at least one
female founder compared to 18% of companies with no
female founder)
3 https://wekh.ca/the-state-of-womens-entrepreneurship-in-canada-2020/
12 | Alberta Technology Deal Flow Study 20213.3 Employees
The most common company size is between 1 and 4 Survey respondents with 5-49 employees tend to:
employees (33% of all Surveyed Companies, a decrease of
7 percentage points from 2018) and almost three quarters • Have raised more than US$1M in funding to date
(74%) of Surveyed Companies have less than 25 employees. • Be in the scaling or establishing phases (73% of these
Compared to the 2018 Study, there has been a significant companies are in one of these phases)
increase in the share of companies with 25 to 49 employees • Have annual revenue in their last fiscal year of between
(13% in 2021 vs. 6% in 2018). $500k - $10 million (55%)
Survey Respondents with 1-4 employees tend to have: Survey Respondents with 50-99 employees tend to have:
• Been founded in the last three years (45%) • Been founded before 2007 (50%)
• Raised less than $US500k since their establishment • Raised more than US$5M since their establishment (41%)
(68%) • More than US$10 million in annual revenue (41%)
• Obtained less than $500k (CAD) in annual revenue in
previous fiscal year (80%)
• Have founders with a technical background (92%)
• Have founders with previous experience (78%)
• Have at least one founder that self identifies as female
(34%)
13 | Alberta Technology Deal Flow Study 202123% of Survey Respondents have 41% or more employees who self-identify as females. Figure 12 shows the breakdown of the Surveyed Companies by the percentage of their employees that self-identify as female. In the figure, each bar shows the percentage of companies with a given share of employees who self-identify as female. For example, 15.5% of Surveyed Companies have between 41% and 50% of such employees. 14 | Alberta Technology Deal Flow Study 2021
4 Operations
4.1 Overview
This section summarizes operational characteristics of the
Survey Respondents.
Half of companies were founded between 2015 and 2020, with
7% of them in 2019 and 14% in 2020.
Survey Respondents that achieved profitability
within 2 years have relatively more female founders,
compared to overall companies, with 35% of them
having at least one founder that identifies as female.
29% of Survey Respondents are in the
Validation Phase, 51% are working on Scaling
and 12% are Establishing their product.
72% of Survey Respondents identify business-
to-business (B2B) as their primary business
model.
67% of Survey Respondents utilize Software in their
product or service offering, while almost 40% rely on
Artificial Intelligence or Machine Learning.
65% of companies consider themselves startups.
16 | Alberta Technology Deal Flow Study 20214.2 Company Characteristics
65% of Survey Respondents are startups, while half of all
Survey Respondents were founded between 2015-2021.
Among mature companies, 56% were founded before 2005.
64 .2% of companies were
founded in 2016 or earlier
Survey Respondents are concentrated in Calgary (62%)
and Edmonton (35%). Compared to the 2018 survey results,
a greater proportion of companies are headquartered
in Calgary (+7 percentage points), and there are less in
Edmonton (-6 percentage points).
17 | Alberta Technology Deal Flow Study 202118% of Survey Respondents are spun-off of academic
research. These companies tend to:
• Be located proportionately more in Edmonton (44%)
• Produce an innovative physical product (44%)
• Have founders with a technical background (94%)
79% of Survey Respondents report not being involved in any
transactions, such as mergers or acquisitions in the past 24
months. Of those that have been involved in transactions,
47% report being the acquirer and 38% report being the target
of an acquisition.4
4 Note that these transactions exclude fundraising.
18 | Alberta Technology Deal Flow Study 2021The majority of Survey Respondents build their own product Survey Respondents that exclusively build their products in-
or service (54%) or combine outsourcing with building its own house tend to have
product (39%). Only 6% of Survey Respondents exclusively
outsource the product or service development. • Between 10-100 employees (54%)
• More than $1 million in revenue (CAD) (51%)
Survey Respondents that exclusively outsource development
tend to have:
• 1-4 employees (71%)
• Annual revenue in the most recent fiscal year of less than
$500k (CAD), including being pre-revenue (85%)
4.3 Products and Services Offered
Company’s products or services have a number of potential Governance (ESG) impacts which startups strived to deliver
impacts on consumers, with ultimate outcomes and benefits in their product or service offerings, with 39% Survey
of business productivity (68%) and cost savings (66%) Respondents having an Environmental Benefit, 45% having a
the most common impacts. This year, we adapted our Social Benefit, and 17.5% having a Governance Benefit.
methodology to include Environmental, Social and
Impacts add up to more than 100% as company products may have multiple impacts.
19 | Alberta Technology Deal Flow Study 202160% of Survey Respondents develop either an innovative service (31%) or physical product (21%), with a further 29% developing a combination of the two. An existing product or service made or delivered in a new way Combination of an innovative physical product and service 67% of Survey Respondents are utilizing Software in their product or service offering and further 36% are relying on Artificial Intelligence or Machine Learning. Big data is utilized by 27% of all Survey Respondents and hardware by 25%. Adds up to more than 100% as companies may utilize more than one technology 20 | Alberta Technology Deal Flow Study 2021
This year, the framework for classifying startup development
phases developed by Startup Commons was used. Over half
of Survey Respondents are Scaling with almost 30% in the
Validating stage and 12% in the Establishing stage.5 Refer to
the glossary for the definition of each stage.
There is a positive relationship between the development A similar trend is visible when looking at revenues in the last
stage of a product and the amount of funding raised to fiscal year: 71% of Survey Respondents in the Establishing
date: more advanced companies in terms of their product Stage and 47% of Survey Respondents in the Scaling Stage
development tend to have accumulated more funding. had revenues of greater than $1 million.
For example: 100% of companies in the Ideating phase have less than $US500k in funding and of companies in the scaling phase, 34.8% have less than $US500k
in funding and 48.3% have more than $US1M in funding
5 https://www.startupcommons.org/startup-development-phases.html
21 | Alberta Technology Deal Flow Study 2021Business-to-business (B2B) is the most common business in 2018. Just over a quarter of Survey Respondents use
model, with 72% of Survey Respondents using that business the business-to-government (B2G) model, a 16 percentage
model. A higher share of companies offers their product or point decrease compared to 2018, in which 39% of Survey
services to individual consumers (41%), compared to 38% Respondents use B2G.
Does not add up to 100% as companies may use multiple business models.
Customers which Survey Respondents sell to are distributed • 62% of surveyed companies selling to the Energy and
primarily across the following industries: professional and Mining industry have either not been profitable yet, or it
other services (34%), followed up by other industrials (23%) took more than five years to become so
and energy and mining (15%).6 • 61% of surveyed companies selling to the Other
Industrials industry have either not been profitable yet, or
• 55% of surveyed companies selling to the Health,
it took more than five years to become so
Wellness, and Medical industry have not been profitable
yet
6 It should be noted that the above chart is not necessarily the percentages of Survey Respondents selling to each industry, but the percentage of total responses that each industry
received. For example, the professional and other services industry is made up of various sub-industries, the most prominent five being technical and scientific services, financial services,
public administration, management, and insurance and if more than one of those was selected by the respondent, then it would be counted as multiple responses for the overall professional
and other services industry. Therefore, the graph above illustrates the percentage that each industry is sold to, as a proportion of total responses.
22 | Alberta Technology Deal Flow Study 20214.4 Exports 59% of Survey Respondents export their products, with 22% of companies exporting more than $1M. The USA is the most common location for exports (60%) while other popular jurisdictions include Europe (30%) and Asia (23%). 4.5 Challenges and Opportunities Almost 60% of Survey Respondents indicated the Lack Access to talent, including developing, acquiring and retaining of Access to Capital / Funding as the biggest immediate teams remains a challenge, particularly in the case of sales challenge they are facing. 57% of the companies that selected (39%) and technical (36%) talent. this have been founded since 2015, and 83% of companies founded in 2021 selected Lack of Access to Capital / Funding • There is some correlation between the challenges as their biggest challenge. Compared to 2018, a lower companies are facing and the amount they have raised: proportion of companies have identified Access to Capital 55% of companies that cited Access to Capital / Funding / Funding as one of the biggest challenges - in 2018, this as their biggest challenge have raised less than US$1M challenge was identified by 63% of companies (5 percentage in funding to date. points higher than in 2021). Market access (i.e. reaching customers and scaling sales) was identified as an immediate challenge by 45% of Survey Respondents. 23 | Alberta Technology Deal Flow Study 2021
Accelerator programs were not heavily attended, with only While the majority of Survey Respondents have not attended 36% of Survey Respondents having participated in such an accelerator program, 50% of the respondents claim they a program. This is however an 8% increase from the 2018 would participate if there was a program for their sector. study. 24 | Alberta Technology Deal Flow Study 2021
5 The
Resources5.1 Overview
This section highlights revenues, profitability and funding
characteristics of the the Survey Respondents
22% of Survey Respondents are in the pre-revenue phase, and
31% of companies had between $1M and $9.9M in revenue in
their most recent fiscal year.
40% of Survey Respondents have achieved
profitability, including 17% in the last two years.
Moreover, 38% of Survey Respondents have revenues
of more than $1M in their most recent fiscal year.
58% of Survey Respondents are currently
seeking funding, a decrease from the 2018
study, in which 70% of companies were
seeking funding.
Over 57% of the Survey Respondents have
undergone one or more rounds of fundraising,
and over 16% of companies have gone through
more than three rounds.
43% of Survey Respondents have received at
least $US1M in funding to date, an increase of 6
percentage points from the 2018 study.
53% of companies sourced their funding from Calgary,
while the other key funding sources are Edmonton (32% of
companies) and Canadian provinces outside of Alberta (34% of
companies).
26 | Alberta Technology Deal Flow Study 202143% of Survey Respondents have achieved profitability, female. Of the companies that did not achieve profitability
including 17% in the last two years. or took longer than 3 years to achieve profitability, only
• Survey Respondents that have yet to achieve profitability 26% had at least one female founder.
tend to have 1-4 employees (67%) • 81% of companies founded in the last 2 years have not
• Survey Respondents that achieved profitability within 2 achieved profitability yet, compared to 21% of companies
years have a higher incidence of female founders, with that were founded before 2014
35% of them having at least one founder that identifies as
38% of Survey Respondents have revenues of more than $1M • Survey Respondents with revenues of greater than $15M
in their most recent fiscal year, representing a 15 percentage tend to be:
point increase from the 2018 study. Among these companies, - Located in Calgary (80%)
85% are in the Scaling or Establishing development phase.
- Not classified as startups (95%)
Further insights into the data suggest that companies that - Not a spin off of academic research (100%)
achieve profitability within a relatively short period of time tend - Founded before 2008 (90%)
to raise less funding than companies that take a longer time to
• In comparison to the 2018 report:
achieve profitability, as demonstrated below.
- Percentage of companies with less than $100K in
• 72% of surveyed companies that became profitable in revenue decreased by 8 percentage points (was
less than one year have less than $US500k in funding to 19% in 2018)
date, 41% of which have raised no funding at all. - Percentage of companies with between
• 64% of surveyed companies that have raised more $500k-$1M in revenue decreased by 6
than US$50M in funding to date have either not yet percentage points (was 12% in 2018)
been profitable, or took more than five years to achieve - Percentage of companies with revenues of more
profitability. than $1M increased by 15 percentage points
(was 23% in 2018)
(and change relative to 2018)
(+6 pts)
(-2 pts)
(no change)
(-8 pts)
(+2 pts)
(-6 pts)
27 | Alberta Technology Deal Flow Study 20215.2 Funding Stage
Over 57% of the Survey Respondents have undergone
one or more rounds of fundraising, and over 16% of Survey
Respondents have gone through more than three rounds.
Seed stage is the most common round of funding achieved 84% of Survey Respondents that have completed a seed
by Survey Respondents (25% of them), followed by pre- round have a founder with previous experience in establishing
seed stage at 18%. Almost a quarter of Survey Respondents a startup and 87% have a founder with a technical
have raised a Series A or later stage of financing. More background.
mature funding rounds were achieved by 13% of Survey
Respondents.7
(and change relative to 2018)
(-11 pts)
(no change)
(+1 pt)
(+2 .6 pts)
(+0 .6 pt)
(no change)
(+2 pts)
(-2 pts)
(no data in 2018)
7 Mature funding rounds include Series A, B, C and beyond. Refer to https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/ for an explanation of each Series.
28 | Alberta Technology Deal Flow Study 20215.3 Fundraising
Of the Surveyed Respondents 71% were able to obtain
some funding in the past, while almost 60% of Surveyed
Respondents are currently seeking funding or additional
funding.
43% of Survey Respondents have raised more than US$1M to Edmonton, Calgary, and the rest of Alberta all have a
date, an increase of 6 percentage points from the 2018 study. more even distribution of total funding raised. Surveyed
Respondents that target certain industries are more likely to
Survey Respondents that received some funding to date tend have raised no funding to date:
have the following characteristics:
• Insurance (44% have raised no funding)
• 48% of companies that have between $US500k and
• Software publishing (41%)
$US1M in funding have at least one female founder
• Communications (39%)
• 83% of companies that have raised more than $US15M in
funding are located in Calgary • Real Estate (33%)
- Of these companies, 67% of them were founded • Arts and Entertainment (36%)
before 2009
• 85% of companies that have raised between $US5M-
$US15M in funding have a founder with previous
experience
• 85% of companies that have raised between $US5M-
$US30M in funding have a founder with a technical
background
29 | Alberta Technology Deal Flow Study 2021Almost a quarter of all Surveyed Respondents stated that they
were unsuccessful in their attempts to fundraise over the last
two years.
Of those Survey Respondents that were able to fundraise
in the last 2 years (67%), there is a similar breakdown in the
funding raised in the most recent year and the funding raised
to date, which is likely due to the fact that over 50% of Survey
Respondents have only undergone one fundraising round.
30 .7% of Alberta companies
have raised between $1M and $50M
30 | Alberta Technology Deal Flow Study 2021Additionally, 46% of Survey Respondents found that it took 6 months or less to close their most recent round of fundraising and less than one in ten Survey Respondents had their most recent fundraising event last more than a year. 31% of Survey Respondents raised more than US$1M in their most recent round and 48% are intending to raise more than US$1M in their next round of fundraising. 59% of the companies that raised over US$1M in their most recent round did so in either the 2nd or 3rd round of fundraising. 31 | Alberta Technology Deal Flow Study 2021
69% Survey Respondents indicated personal savings as a
source of funding, followed by government grants and credits
(55%), friends and family (40%), and angel investors / family
offices (40%).
• This is a similar breakdown to 2018, with personal
savings (-5 percentage points from 2018), government
grants / credits (-1 percentage point), and friends and
family (-7 percentage point) as the top three in both years
• The percentage of companies citing venture capital
investors as a funding source has increased by 6
percentage points from 2018, while those citing angel
investors / family offices has decreased by 3 percentage
points
• Venture capital investors account for 24% of funding
sources compared to 40% of Survey Respondents raising
funding from angel investors.
Adds to more than 100% as companies may have multiple funding sources. Note that the funding sources do not necessarily represent the amount of funding coming from each source, only
the popularity of funding sources.
32 | Alberta Technology Deal Flow Study 202153% of companies accessed their funding from Calgary funding sources, while the other funding sources are based in Edmonton (32% of companies) and Canadian provinces outside of Alberta (34% of companies). This is similar to 2018, where Calgary-based funding was sourced by 50% of companies, while Edmonton-based was sourced by 31% of them. Adds to more than 100% as companies may have multiple funding sources Financing options are diverse, with equity used by 47% of Survey Respondents, grants by 23%, debt by 20% and hybrids combinations noted by 15% of Survey Respondents. 33 | Alberta Technology Deal Flow Study 2021
Appendix A Glossary of Terms
Throughout this report, a number of key terms are used for which the following definitions should be assumed.
Key terms Scaling
Companies that focus on KPI based measurable growth in
2021 Study users, customers and revenues and / or market transaction
Study of the technology and life and health science and market share in a big or fast growing target market.
industries in Alberta for 2021. Establishing
Deal Flow Study Companies that achieved great growth that can be
The Deal Flow Study has been providing stakeholders expected to continue.
with a shared understanding of the strengths, challenges
and make-up of the technology and innovation industries Funding Rounds & Sources of Funding
across sectors and regions in Alberta. It provides the
leading yardstick for measuring the health, growth, and Angel
composition of the Alberta technology sector. Investment by an individual in a company from their
individual funds and not using funds raised from other
ESG
people.
Environmental, Social, and Governance - refers to the three
central factors in measuring the sustainability and societal Crowdfunding
impact of an enterprise or an investment. Financing received from a crowdfunding platform through
which individuals have provided non-equity funding in
Identified Companies
exchange for companies’ products, generally before they
Technology companies which were found to be operating in
Alberta in 2021. have been released to the market.
NAICS Pre-seed and / or Seed
North American Industry Classification System used for When any investor type provides the initial financing for a
industry classification of companies.8 new enterprise that is in the earliest stages of developing.
Survey Respondents Venture Capital
Companies that completed the survey. Form of private equity and a type of financing that investors
provide to startup companies and small businesses that are
believed to have long-term growth potential.
Startup Phases
Startup Development Phases
Other Funding Types
A framework for classifying startup development phases
developed by Startup Commons.9 Convertible note
A form of short-term debt that converts into equity, typically
Ideating in conjunction with a future financing round; in effect, the
Companies with entrepreneurial ambition and / or potential investor would be loaning money to a start-up and instead
scalable product or service ideas for a big enough target of a return in the form of principal plus interest, the investor
market. would receive equity in the company.
Concepting Debt
Companies defining mission and vision with initial strategy Borrowed money with repayment expectations. Usually
and key milestones for next few years on how to get there. from banks.
Committing Equity
Companies with committed, skills balanced co-founding Ownership stake in a company, usually in exchange for
team with shared vision, values and attitude. investment.
Validating Grants
Companies iterating and testing assumptions for validated Usually financial support from government and government
solutions to demonstrate initial user growth and / or funded agencies and typically does not include the
revenue. recipient company giving up equity.
8 https://www23.statcan.gc.ca/imdb/p3VD.pl?Function=getVD&TVD=1181553
9 https://www.startupcommons.org/startup-development-phases.html
35 | Alberta Technology Deal Flow Study 2021Hybrids Health, Wellness and Medical
Combination of multiple funding types. This sector comprises establishments primarily engaged in
providing health care by diagnosis and treatment, providing
Sectors & Verticals residential care for medical and social reasons, and
providing social assistance.
Agriculture, Food & Bio-resources I.T. (Information Technology)
This sector comprises establishments primarily engaged Computer hardware / software & services, Internet
in growing crops, raising animals, harvesting timber, software & services, eCommerce.
harvesting fish and other animals from their natural habitats
and providing related support activities. Impacts
Outcomes of the technology (including ESG Outcomes
Analytics / Big Data (environmental, social, governance), business productivity
Companies providing a product or service where the core
and cost savings).
technology handles data that is too large for traditional
database systems, usually due to data volume, data Information & Media
velocity, or data variety. This sector comprises establishments primarily engaged
in producing and distributing (except by wholesale and
Artificial Intelligence / Machine Learning
retail methods) information and cultural products, as well
Companies developing technologies that enable computers
as operating facilities or providing services to meet the
to autonomously learn, deduce and act, through utilization
cultural, entertainment and recreational interests of their
of large data sets.
patrons.
Business Model
Medical Device
To whom the product or technology is delivered or sold
Health / Medical focused mechanical or electronic
to. Business Models include: B2B (business-to-business),
equipment.
B2C (business-to-consumer), Two-sided platforms (both
B2B and B2C simultaneously), and B2G (business-to- Other industrials
government). This sector comprises establishments engaged in
construction, transportation, warehousing, manufacturing,
Business Productivity
infrastructure, wholesale trade and non-energy utilities.
Software products aiming to increase business productivity
and efficiency. Pharmaceuticals
Compound manufactured for use as a drug to diagnose,
Customer Industries / Verticals
cure, treat or prevent disease.
The industry which the tech product or service is marketed
to or focused upon. Professional and Other Services
This sector comprises establishments primarily engaged
Enabling Technology / Innovation
in activities in which human capital is the major input.
The technology utilized in the product offering (Innovation
These establishments make available the knowledge and
categories include: digital / soft tech, physical / hard tech,
skills of their employees, often on an assignment basis.
innovation in the business or product model, hybrid, other).
The individual industries of this sector are defined on the
Energy and Mining basis of the particular expertise and training of the service
This sector comprises establishments primarily engaged provider and include financial services, education, legal
in extracting naturally occurring minerals. These can services, management, food services, retail trade and
be solids, such as coal and ores; liquids, such as crude others.
petroleum; and gases, such as natural gas.
36 | Alberta Technology Deal Flow Study 2021Appendix B Detailed Approach & Methodology
In 2021 Alberta Enterprise augmented the Deal Flow Study In addition to developing new classification schemes for the
methodology to uncover a more well-rounded view of the identified companies, the technology industry was updated
innovation ecosystem in Alberta. Technology companies for the purpose of the 2021 Study to include software,
included in the Study were segmented based on the hardware, equipment, devices, chemicals, health or life
Customer Industry or Vertical their technology product science products or services, and any product or service
or service is marketed to or focused upon. The North offerings that require development and / or research (but
American Industry Classification System (NAICS) was used not including value added resellers, integrators, distributors
to map these categories to ensure broader comparability. and resellers of high technology products manufactured by
others).
To understand the specific enabling technology(s)
being leveraged by companies in their product offering,
companies selected the enabling technologies across Stage 2 - Criteria and mapping
digital / soft tech or physical / hard tech, innovation in the
business or product model, hybrid, or other. Furthermore, In the second stage of the 2021 Study, a master list of
to better understand who the technology company sold candidate technology companies was compiled. The
or delivered their product or technology to we sorted purpose of the Deal Flow Study is to track not only
technology company by business model, including: B2B startups, but rather technology companies more generally.
(business-to-business), B2C (business-to-consumer), Two- Therefore, technology companies of all ages and stages
sided platforms (both B2B and B2C simultaneously), and are included, including startups and more mature
B2G (business-to-government). companies. To this end, a variety of databases available to
PwC were utilized, in addition to company listings provided
To ascertain the specific impacts targeted, we segmented by Alberta Enterprise.
Alberta technology companies by the outcomes of
their technology. Outcomes included ESG Outcomes The databases were scanned and filtered according to a
(environmental, social, governance), business productivity number of company attributes, namely:
and cost savings, enhancing our ability to account for
• Location of the company’s headquarters
CleanTech companies and beyond. This framework
allowed us to more accurately classify companies who • Product or technology offering
target multiple customer industries and leverage multiple • Company’s primary NAICS industry
technologies. The present methodology will provide more • Ownership status (publicly traded vs. privately held)
in-depth findings on the tech companies and their unique
attributes across verticals, stages, and other dimensions.
Stage 3 - Company screening and
verification
Stage 1 - Scoping and criteria PwC verified companies relevant to the 2021 Study (and
development eliminated those that were not) according to the following
The first stage of the 2021 Study involved scoping the attributes, which were agreed upon with Alberta Enterprise:
project and developing a new classification scheme for the
• Headquartered in Alberta
identified technology companies. For the purpose of this
study, the North American Industry Classification System • Privately held
(NAICS) was used to classify the identified companies’ • Produced a tech based product or service
industry of operation. NAICS is used by national statistical • Industry classification that does not include retailers,
agencies, including Statistics Canada, in classifying wholesalers, resellers and distributors.
business establishments for the purpose of collecting,
analyzing, and publishing statistical data related to the The companies identified in the first stage were paired
economies. Unlike in the previous Alberta Deal Flow down to include only those that were still operating as of the
Studies which relied on customized classification schemes, end of 2021. This was achieved through the verification of
NAICS classification was used for the 2021 Study to allow the operating status of the companies’ websites, obtained
for better comparison and benchmarking of the technology either through a scan of the various databases or through
industry in Alberta. secondary internet search. These final verified companies
are referred to in this report as the "Identified Companies”.
38 | Alberta Technology Deal Flow Study 2021The verification phase of the research was intended to be a to the final list. In addition, some companies taking the
census of all existing Alberta-based tech companies which survey indicated that they did not belong to the technology
meet the verification criteria, however some companies sector. These companies’ responses were not considered
may have been missed. in the survey results analysis.
Stage 4 - Detailed survey of sample Unless otherwise noted, all dollar amounts in this report are
companies expressed in Canadian currency. Percentages presented in
this report are rounded for simplicity.
The last stage of the study was an in-depth survey of
Alberta’s tech sector. To this end, an online questionnaire Data collection overview
was distributed to companies that meet the verification
criteria. Data used to compile the list of technology companies was
collected from four categories of data sources:
The purpose of the survey was to dive deeper into the
unique attributes, including: 1. Previous year’s Master Lists - companies included in
the previous Alberta Tech Deal Flows Studies were
a. Further segmentation, including age and business scanned and verified according to the set of relevant
model criteria.
b. Operations data, including product offering stage, 2. Additional private and publicly available datasets
challenges, revenues and exports containing technology companies were provided
c. Funding sources, including funds raised and rounds of by Alberta Enterprise and Western Economic
funding undertaken Diversification Canada.11 These companies
were sourced from Alberta company ecosystem
d. Employee characteristics, including gender and
stakeholders lists, Alberta Enterprise Venture Capital
minority status of founder and employees
Portfolio Funds, as well as from service providers and
The survey was hosted by PwC and was open to ecosystem partners.
participants from February 1, 2021 to February 19, 2021. 3. PwC utilized a number of company databases
In total, 350 qualified companies completed the online including Capital IQ, DB Hoovers, Crunchbase, CB
survey, representing approximately 12% of the identified Insights and Pitchbook to identify relevant companies.
companies. The companies that completed the survey are 4. PwC’s internal databases were also used to identify
referred to as “Survey Respondents”. the relevant companies
In addition to inquiring about the unique attributes of Data collection and verification was conducted between
companies, the survey also gave the respondents an November 2021 and January 2021. Therefore, the final list
opportunity to provide comments or suggestions to improve of companies represents the technology companies that
government policy for the technology sector. In total 121 were operational as of the end of 2021 and the beginning
Survey Respondents provided such commentary. of 2021.
It should be noted that the survey phase was intended to be Industry classifications used by various data sources varied
a representative subset of the universe of tech companies considerably. As part of this study, PwC assigned a unique
identified in the verification stage. However, it is possible North American Industry Classification System (NAICS)
that companies motivated to answer the survey may have code to each identified and verified company based on
different characteristics than those that did not participate. the nature of the company’s product or service offering.
For example, 30% of the companies identified in the initial It should be noted that many of the identified companies
identification were based in Edmonton. However, 34.6% operate across multiple industries. Consequently, the
of the companies that answered the survey indicated their assigned industry, which was selected based on the most
headquarters location to be Edmonton. This suggests appropriate characterization of the companies’ operations,
some bias in the survey responses. may not fully represent an individual company’s industry
classification.
Some Alberta technology companies that participated in
the survey were not originally included in the list of verified
companies.10 These companies were subsequently added
10 There were 39 such companies.
11 Company listings provided by WD were from publicly available sources.
39 | Alberta Technology Deal Flow Study 2021Appendix C Study Considerations
The conclusions expressed and information presented Factors behind a significant increase in the number
in this report rely on the following major assumptions, of identified companies in 2021 relative to 2018: The
in particular completeness, reliability, and accuracy of following factors are proposed as potential explanations for
external sources used in this report. the increase in the number of companies observed in the
2021 Study:
It should be noted that significant deviations from the above
listed major assumptions may result in a significant change • Use of different data sources: PwC has relied on all
to our analysis. databases used for the purpose of the 2018 study,
however other databases such as Capital IQ, DB
Data limitations: PwC has relied on the information Hoovers, Crunchbase, CB Insights, Pitchbook were
provided by a number of external sources. PwC has relied also used, as well as PwC’s proprietary data.
upon the completeness, accuracy, and fair presentation of
• Broader industry classification: the industry
all information and data obtained from Alberta Enterprise
classification used in the 2021 study was based on
as well as from other sources, which were not audited
the NAICS classification and includes almost every
or otherwise verified. The findings in this report are
sector of the economy. The industry classification
conditional upon such completeness, accuracy, and fair
used in 2018 and previous years was more focused on
presentation, which have not been verified independently
technology-specific industries. The broader industry
by PwC. Accordingly, PwC provides no opinion, attestation
classification has likely resulted in a larger number of
or other form of assurance with respect to the results of this
companies captured in 2021 compared to the previous
study.
years.
Receipt of new data or facts: PwC reserves the right at • Certain products and services offerings that were
its discretion to withdraw or make revisions to this report identified as technology based in 2021 might not have
should PwC receive additional data or be made aware of been categorized as such in 2018 and previous years.
facts existing at the date of the report that were not known
to us when PwC prepared this report. The findings are as Because of the above factors, it is not possible to provide
of March 2, 2021 and PwC is under no obligation to advise the number of technology based companies operating in
any person of any change or matter brought to its attention Alberta in 2021 according to the methodology and criteria
after such date, which would affect our findings. used in previous years’ methodologies.
This report and related analysis must be considered Of the 1,238 Identified Companies in 2018, 940 were
as a whole: Selecting only portions of the analysis or the included in 2021.12 The remaining 298 companies were
factors considered by us, without considering all factors determined as either not operational (approximately 45) or
and analysis together, could create a misleading view of otherwise not fulfilling the validation criteria (approximately
our findings. The preparation of our analysis is a complex 245).
process and is not necessarily susceptible to partial
analysis or summary description. Any attempt to do so
could lead to undue emphasis on any particular factor or
analysis.
Companies mapping and verification: Qualified
companies may have been missed in the study if those
companies were not appearing in any tech databases or
not referred to by the participating ecosystem partners. In
addition, some companies may have been misclassified
as technology based on the various descriptions of their
product or service offerings. For example, some companies
may offer technology based services, however technology
may not be their primary offering and consequently such
companies may not classify themselves as fulfilling the
verification criteria.
12 As noted in the table, there were 1,238 companies included in the 2018 study, however an additional 43 companies were identified during the online survey phase. We did not verify
which of the 43 companies were included in the 2021 list due to unavailability of the companies’ names.
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